Many suppliers in Mexico remain shut down, causing a delay in restart for Detroit automotive factories.  Approximately 40% of imported auto parts come from Mexico, and parts manufactured in the US are often exported there for vehicle production.  Some of the strain is due to the Detroit Three, that have reportedly targeted a restart for their U.S. assembly plants in mid-May.  However, Mexico remains on lockdown, and auto parts are considered a nonessential business to the country.  Mexican plants are to remain closed through May 30^th.

“This is the issue, I believe, the whole industry is struggling with,” said Joe Petrillo, director of business development and advanced engineering for Meridian Lightweight Technologies, a supplier of lightweight cast metal parts mostly for the auto industry.

The automotive industry like many others is interconnected to the global supply chain. The U.S. auto industry cannot build cars if government actions in other countries or states are not in sync with one another.

General Motors, Ford Motor Co. and Fiat Chrysler Automobiles idled their assembly plants stateside in March as the pandemic swept the nation. They have not declared a restart date yet, but they have reportedly eyed May 18 as a possibility. Toyota announced it plans to postpone it’s operations until May 11^th.

There is still inventory in the supply pipeline to support a U.S. restart, but there’s also a larger gap in time between the U.S. restart and the Mexican restart. Many automakers still have hope that there could be some flexibility by the Mexican government that would allow the auto industry to start back up in support of a North American start up. On April 24, the Ministry of Economy in Mexico published a news release stating they are working with the U.S. and Canadian governments on a plan for the automotive industry to safely restart activities in the region.

As the American government plans to start reopening the U.S. economy in May, many companies have begun to question whether Mexico and Canada will be on the same time schedule.

Manufacturers in chemicals and electronics have suppliers across both borders. The automotive industry is not immune to the same structure. Much of the uncertainty revolves around Mexico, which has taken a stricter approach than the U.S. and Canada in regards to what they consider an essential business. The lack of coordination between countries has caused chaos in many industries. Many automakers have expressed increased concerns about lack of coordination when economic activity in only one nation resumes.

On Thursday, Trump made him plans to reopen the U.S. economy well know, releasing guidelines that could allow some states and employers to resume business and work within a month.  “A national shutdown is not a sustainable long-term solution,” the president said in a briefing. “To keep vital supply chains running, these chains have to be taken care of so delicately. We must have a working economy and we want to get it back very, very quickly.”

Some larger carmakers have indicated they plan to reopen in early May. But for the auto industry in particular to get back to producing vehicles, it’s not enough to just reopen parts of or even the entire U.S. economy. Auto supply chains across North America are intertwined, so a smooth reopening may not be possible. Even in a best-case scenario in which the nations and states cooperate on the timing and scope for a reopening, the logistics will be more complicated for individual companies and plants.

Safely reopening plans requires a sufficient supply of personal protective equipment for workers, which may be a problem given shortages of gloves and masks in the U.S.  Plants in China cycled through the virus, but didn’t restart at full production immediately. More important that reopening is reopening correctly.

During this economic crisis caused by the coronavirus COVID-19 pandemic, automakers are struggling to offer car payment programs to help those in need. Their marketing efforts are now focused on trying to convince people that it is a great time to buy a car.

Major car manufacturers such as Fiat Chrysler Automobiles (FCA), Ford Motor Company, General Motors, Hyundai, Kia, Nissan, Toyota and Volkswagen are offering  coronavirus payments and plans.

Automakers’ COVID-19 programs and incentives to spur sales have begun quickly. These types of incentive programs have been used in the past during economic downturns and for inventory control. The good news is that history repeats itself, so car sales will recover over time, so it won’t be necessary to count on these types of programs long term.

During tough economic times, car manufacturers are anxiously waiting for things to go back to normal. Major car manufacturers in the USA are offering several incentives such as delayed payment options for people in the country affected by COVID-19.

For instance, Fiat Chrysler is providing funding for leases and new-car purchases through Chrysler Capital and Ally Financial. They’re also offering a wide variety of payment options.

Many car manufacturers are offering help to those people affected by the pandemic. If you anticipate problems making your payments, it is important to contact your auto financier as soon as possible. It is in your best interest to discuss your options this could include things such as flexible payment arrangements and extensions. Keep in mind that if you are leasing you can also negotiate to postpone lease payments as well.

Automakers are also introducing new programs to stimulate potential buyers to purchase their car.

General Motors is offering customer’s interest-free payments for 84 months and also postponed payments for up to 120 days. Ford Credit is offering to make customers first three loan payments while giving the option to delay their first payment for an additional 90 days.

It is important to understand that every car manufacturer has different needs so they are offering different programs. But all are offering flexible and creative financing relief to customers during this time.  As a consumer, you can be confident that car dealerships are open for both vehicle sales and service.

Automakers are also giving customers the option to shop online and get their car delivered. Through this initiative, consumers have the opportunity to choose a vehicle, estimate their trade-in value, agree on payment, add accessories, and schedule delivery without visiting the showroom. A great idea during social distancing and isolation.

Projections for U.S. auto sales for the rest of 2020 are not looking strong. If COVID-19  isolation is prolonged more long-term, economic slowdown will lead to fewer car sales. This scenario has forced automakers find creative ways to help people in this time of need.

Tesla has announced it plans to extend it’s lineup in China by offering a Model 3 Sedan that’s locally built with a longer driving range. They will start as early as this week. The vehicle will have a range of more than 400 miles on one charge, compared to its current basic version that holds much less.

The price will start around $45,800 before rebates, although exact pricing is yet to be determined. A longer range could help Tesla fend of competition with other brands such as Volkswagen Group and BMW who are also bringing out new electrified models in the China region.  Automakers are counting on new vehicles to spur demand in the market, which has been hit hard by the coronavirus pandemic.

The longer range Model 3 will qualify for electric- vehicle subsidies, and is exempt from China’s sales tax on cars. Registrations of Tesla vehicles have fallen for the past two months in China, showing the carmaker is also suffering from the broader auto industry decline. The slowdown has come amid Tesla’s multibillion-dollar push to expand in the world’s largest electric vehicle market.

Tesla’s factory in China has recovered from a virus-related shutdown better than most in the industry, helped by aid from local authorities. After resuming operations at its Shanghai plant, Tesla’s outside the United States have surpassed the capacity it had before shut down. It has a weekly production reaching about 3,000 cars, the company said last month.

In Spring of 2008, Renault executives received notice from colleagues at Nissan North America about the health of the U.S. auto market. Prices for used cars fell significantly, and orders were also slow. The U.S. subprime mortgage market also began to crumble with securities losing value and adjustable rate loans began to reset with higher interest rates.

Renault’s leaders decided to cut 5,000 European positions, which later was raised to 6,000 through attrition and severance. Inventory was decreased so that cash flow and production could be closely monitored. Subcontracting costs were also lowered, and development of a sports car similar to the Nissan 350Z was halted with a postponed launch.

“The crisis started sooner for carmakers in the U.S.,” said Patrick Pelata, who was named Renault’s chief operating officer in mid-October 2008. “We looked to the U.S., and we said it was going to come to Europe.”

Much of this happened after Lehman Brothers filed for bankruptcy, setting off a global financial crisis. At the same time, Fiat decided to extend summer vacation closings of its plants after noticing a global collapse in new orders, including Ferrari’s. “The second half of this year and the first half of the next could be a true bloodbath,” Fiat and Ferrari Chairman Luca Cordero di Montezemolo told Automotive News Europe in July 2008. “By summer of 2009, we should have a clearer idea of the winners and the losers,” he said.

Through incentives and government aid the European auto industry was able to bounce back. However, the COVID-19 outbreak has temporarily shuttered factories and showrooms once again. Many executives and analysts have said that automakers learned lessons in 2008 that can help them to better navigate the current pandemic. “Since that time all car manufacturers have gotten more rigorous about capital allocation and trying not to spend more than required, and also about having sufficient cash reserves in case they face a similar crisis,” one expert said.

“The big advantage between the crisis now and 10 years ago is that capital markets are very liquid and interest rates are very low, so I am pretty certain we won’t see a cash crunch,” Porsche Chief Financial Officer Lutz Meschke said. For now, many automakers are looking into temporary loans that will allow them to cover fixed costs such as salaries to avoid any layoffs. This year, after imposing restrictions on movement and commerce in an effort to slow the spread of the coronavirus, Europe’s national governments pledged they would step in to help automakers again, with loans, direct payments or in a worst-case situation.

These guarantees have helped prevent automakers from cutting costs. It’s expected a similar helping hand will be extended in the wake of COVID-19, today.